Application Fees

[Jason V.]

Every single book on Landlording I pick up, every podcast I listen to, and every post I read says the application fee ($25-$75) is a must.

But in researching locally (as a previous renter, and by asking local renters) I'm finding that only larger apartment complexes around here require this. 

Anyone else who invests in a rural area have an opinion on this? To give you an idea, two bedrooms in a house around here typically rent in the $650 range, typical one month security deposit, appliances all provided, etc. 

To be honest, the tenants I have now I placed before getting involved at BP, so I did screen them well (landlord references, employment checks, eviction/court checks, income verification, etc.) I just didn't pay to run criminal background checks or credit checks. I've had great tenants for the last two years, but I know luck won't last forever....

[Mike Wood]

@Jason V. I do not charge everyone an application fee.  I have started to use Cozy.co for online applications, and do not initially require the background check and credit check.  Since those are the items that cost money, the initial application is free to apply.  Once we review the applications, if we like what we see, I will request the background check and credit check. The applicant then pays that, using the service supplied by Cozy.co.  Its similar to Smartmove in that way.

But since I am only asking for the background check and credit check on a select few, I am not wasting applicants money when they would not have meet our requirements.

Before using online applications, I did it similarly.  I would take paper applications and review them.  Alot of the applicants would be eliminated (lack of income, evictions, job issues, etc).  Once we had selected our preferred applicant, the last step was for them to pay for the background check and credit check, which they did directly to the company (Smartmove). The applicant knew that we were serious about renting the apartment to them.

I can see how an application fee would eliminate tire kickers, but in my market, applications fees are not very common and I would be afraid that it could turn off good tenants.